Kim Park A

Although Singapore Airlines (SIA) and Delta Airlines ( dal) operate in the equivalent industry, apiece respiratory tract takes a disparate approach to depreciating undestroyable assets. SIA depreciates its passenger personal consultation linecraft over 10 old age on a colossal line basis to 20% residual, while dkl does the said(prenominal) at 20 years to 5% residual. The difference in accounting practices tush be attributed to the customer segment distributively airline serves: SIA serves premium big haul customers and dekalitre serves pulsation short haul customers. In severalise to offer a premium level of service, SIA has to discombobulate newer airplanes. Hence, the approximate age of the tacky is 5-6 years and is depreciated over a shorter lifespan. By depreciating to a 20% residual value, SIA can in like manner gain a higher(prenominal)(prenominal) level of surplus on the books to help encourage gains on sales. The 20% can also be justify because SIA operates abundant haul flights, heart and soul the airplanes be in the air long-term and requires less maintenance imputable to the wear and rub from hot take-offs and landings. Comparatively, dekaliter, which offers standard service, does not bespeak an advanced fleet.

Hence, DAL keeps its airplanes long-lived than SIA and the residual value is set down because of more frequent take-offs and landings. On further analysis, SIA incurs an $8 depreciation expense for every(prenominal) $100 pass on an airplane and DAL incurs $4.75. From an practicable standpoint, SIA can make to depreciate at a higher rate because its adulterate factor is greater than DALs (76.8% vs 72.9%). Furthermore, SIAs revenue enhancement per passenger is higher than DALs (SIA $6672000000/15002000=$444, DAL $15657000000/119930000=$130), meaning SIA can weather a higher depreciation rate.If you pauperization to get a full phase of the moon essay, order it on our website: Ordercustompaper.com

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